The Maharashtra Electricity Regulatory Commission (MERC) has allowed the Maharashtra State Power Generation Company Limited (MSPGCL) and Maharashtra State Electricity Distribution Company Limited (MSEDCL) to procure solar power at rates discovered through competitive bidding.

The MSPGCL and MSEDCL had jointly filed a petition seeking the commission’s approval for the adoption of tariff at ₹2.99 (~$0.04)/kWh for 50 MW of solar power projects under the ‘Mukhyamantri Saur Krishi Vaahini Yojana’.

The MSPGCL had issued the tender for 50 MW of solar projects at various locations in western Maharashtra (Ph-II-C) to supply solar power to agricultural feeders on Public-Private Partnership (PPP) model and its operation and maintenance for 25 years. These projects are to be set up at different locations in the western parts of the state under the ‘Mukhyamantri Saur Krishi Vaahini Yojana’ program.

In response to the tender, it had received the lowest bid of ₹2.99 (~$0.04)/kWh from SPPPH Solar India Projects Private Limited. The Commission had approved this tariff. Now, MSPGCL says it has identified the land at various sites to be offered to the winner of the bids at a nominal lease rent. MSPGCL had stated that the land utilized for these projects are barren, non-fertile, non-agricultural, and the actual cost of these land parcels are lower than the price of normal land parcels. Considering the land cost of ₹500,000 ($7,007)/MW, MSPGCL had calculated the impact of land cost on the tariff at ₹0.012 ($0.00017)/kWh factored over 25 years. If the impact of this land cost is added to the discovered tariff, the resultant tariff comes to ₹3.002 ($0.04)/kWh.  MSPGCL is now requesting the MERC to approve the tariff of ₹3.002 ($0.04)/kWh for the 50 MW solar projects.

The Commission noted that the MSPGCL was transparent in its competitive bidding process, and found it fit to adopt and approve the tariff of ₹2.99 (~$0.04)/kWh as it was within the acceptable range of the rates it had approved earlier for the MSEDCL.

Additionally, the Commission, in its order, also allowed for the solar power procured from these projects to be considered for the fulfillment of the MSEDCL’s solar renewable purchase obligation (RPO) targets.

A few months ago, both MSECL and MSPGCL had approached the state commission seeking its approval for the adoption of ₹3.10 (~$0.04323)/kWh as the tariff for the long-term procurement of power from a 7 MW solar project. After examining the petition, the Commission had approved this tariff.

Maharashtra distribution licensees have been facing challenges in meeting the RPO requirements for quite some time now. In March 2019, the MERC had warned MSEDCL to comply with its solar RPO. The MERC noted a shortfall of 2147.016 MU in fulfilling the cumulative solar RPO targets until FY 2017-18 and had ordered the MSEDCL to purchase solar power and renewable energy certificates by the end of March 2020 to fully meet its standalone and cumulative shortfall.

MSEDCL also wrote a letter to MERC stating that the commission’s proposal to revise the solar RPO target of 13.5% by 2024-25 was quite stiff and that despite efforts, it would not be able to achieve them. The state needs to install a total solar capacity of 12,500 MW by 2024-25 to achieve the RPO target while its current contracted solar capacity stands at 4,200 MW.

Recently, the state issued the draft version for its tariff determination regulation order for renewable projects that are commissioned in the state for the generation and sale of electricity to distribution licensees in Maharashtra.

Image credit: Thomas Lloyd Group [CC BY-SA 4.0]